With millions of people in debt and many of them digging their hole deeper each day, the problem is bound to spill over into other aspects of their lives. We are already familiar with how debt can negatively affect relationships and how it can prevent people from pursuing their dreams, but one impact that isn’t discussed as much is how debt impacts the workplace. Debt expert Leslie Tayne takes a look at how employees’ debt affects their employers.
When people are in debt, they have to find a way to pay at least the minimum amounts due and if their current job doesn’t pay them enough to do that, these employees have to either work more at that job or find a second job. Either solution can lead to employee burnout, which can then lead to poor performance, lack of production, and other issues that directly impact the employer.
Employees who are burning the candle at both ends just to stay afloat financially are not able to be their best selves at their job. Even if their performance is satisfactory, imagine what it would be like if they were able to put all their energy into one job for a reasonable amount of time each day? Plus, burnout can trigger all sorts of health issues that can require employees to miss days at work. This doesn’t help either the employee or the employer.
Workers who are drowning in debt are always on the lookout for a higher paying job. They are ready to jump ship at a moment’s notice if another opportunity comes up that can help them get out of debt more quickly. Hiring and training new employees costs employers significantly more than retaining employees who are already trained, so losing employees to higher paying jobs is a real threat, especially to companies that operate on razor-thin margins.
People who are in debt are constantly worried about their financial situation, which means they’re still thinking about it while they’re working. When their minds are on whether or not they’ll be able to make this month’s mortgage or rent payment, they aren’t on the job at hand. This is not only lowering their productivity, but also causing a potentially dangerous situation, particularly if they’re operating equipment that requires their full attention.
Fortunately, employers can help their employees deal with debt, which in turn has a positive impact on the employers themselves. For example, offering debt management education classes, giving them options to work overtime, providing raises for deserving employees, and investing in benefits like a 401(k) are all ways to ease employees’ concerns about their debt.
The key for employers is to realize that their employees’ financial situations have a direct impact on their job performance. Helping them manage their debt and get out of it more quickly leads to more loyal employees who will show their appreciation by working harder for you.
It’s easy to pretend that an employee’s debt doesn’t carry over into their work life, but the reality is that their debt is always with them. By giving them tools to help them manage their finances and dig out of their debt, you’re not only helping them live a debt-free life, but you’re ensuring you get the best from your employees as well.